Weekly Market Outlook: U.S. October CPI Focus and Powell and Fed Officials Speak

Insights – This week, the U.S. will release October CPI data, with inflation expected to face challenges in easing further. Retail sales data will also be closely watched for insights into the economy, guiding the Fed's future policy. Fed Chair Powell's remarks will be closely followed, with markets predicting the Fed may slow rate cuts next year. Investors will look for clues from a series of Fed speeches. On the corporate front, major Chinese companies like JD.com, and Alibaba will release earnings, alongside U.S. firms Disney and Cisco.

Last week, the U.S. presidential election concluded with Trump announcing his victory early on November 6. Investors are now focused on the implementation of his policies. The Fed cut rates by 25 basis points, lowering the federal funds rate to 4.50%-4.75%, as expected. Powell emphasized that the election results won’t impact short-term policy but acknowledged that the next administration’s policies could affect the economy. The Bank of England also cut rates by 25 basis points, lowering the policy rate to 4.75%, marking its second cut this year.

U.S. October CPI and PPI

September CPI rose 2.4% YoY, slowing from 2.5% but exceeding expectations. Core CPI increased 3.3% YoY, slightly above estimates. PPI was flat MoM, below expectations of 0.1%.  

With the labor market cooling, markets expect another Fed rate cut in December. However, Trump’s presidency could bring stronger growth and higher inflation, possibly leading the Fed to pause cuts in January.  

October inflation data is expected to show challenges in achieving the Fed’s target, with core CPI likely holding steady and overall CPI rising 0.2% MoM for the fourth straight month.

Strong U.S. October Retail Sales Expected

The NRF predicts holiday retail sales will grow 2.5%-3.5%, down from 3.9% last year.  

September retail sales rose 0.4% MoM, beating expectations, driven by strong consumer spending. Analysts expect steady growth in Q4, supported by a strong labor market, though Fed economists note that spending is increasingly concentrated among higher-income households benefiting from asset price gains.

Key Economics Data:

- Wednesday: U.S. October CPI (YoY)

- Thursday: U.S. October PPI (YoY)

- Friday: U.S. October Retail Sales (MoM)

Key Economics Events:

- Tuesday: Richmond Fed President Barkin speaks.

- Wednesday: Minneapolis Fed President Kashkari and Richmond Fed President Barkin speak.

- Thursday: St. Louis Fed President Mester and Kansas City Fed President George speak.

- Friday: Fed Chair Powell participates in a "Global Perspectives" panel; New York Fed President Williams and BoE Governor Bailey speak.

U.S. Earnings:

- Tuesday: Shopify (SHOP.N), Tencent Music (TME.N), UP Fintech (TIGR.O)

- Wednesday: Cisco (CSCO.O)

- Thursday: Disney (DIS.N)